L 9- mith and jones inc is primarily engaged in the

Question

L 9- mith and Jones, Inc. is primarily engaged in the worldwide production, processing, distribution, and marketing of food products. The following information is from its 2011 annual report:

	2011	2010
Earnings per share	S                    1.08	$                      1.14
Cash dividends per common share	$                     0.80	S                     0.76
Market price per common share	S                   12.94	S                    15.19
Common shares outstanding	25,380,000	25,316,000
Total assets	$1,264,086,000	$1,173,924,000
Total liabilities	S         823,758,000	S 742,499,000
Nonredeemable preferred stock	S           16,600,000	S            16,600,000
Preferred dividends	S             4,567,000	S                930,000
Net income	S           32,094,000	S            31,049,000

Required

a. Based on these data, compute the following for 2011 and 2010:

Percentage of earnings retained 2 Price/earnings ratio

3. Dividend payout

4. Dividend yield

5 Book value per share

b. Discuss your findings from the viewpoint of a potential investor.

P 9-11 )On December 31, 2011, Farley Camera, Inc., issues 5,000 stock appreciation rights

toitspiesident to entitle her to receive cash for the difference between the market price of its stock and a preestablished price of $20. The date of exercise is December 31, 2012, and the required service period is the entire three years. The market price fluctuates as follows: 12/31/12-423.00; 12/31/13-$21.00; 12/31/14-526.00. Farley Camera accrued the fol­lowing compensation expense:

2012           $15,000         2013             S(10,0001              2014              $25,000

Required:

What is the executive's main advantage of receiving stock appreciation rights over stock options?

b. In 2012, a $15,000 expense is recorded. What is the offsetting account?

c. What is the financial impact on the company of the exercise of the stock appreciation rights in 2014? How does this impact affect financial statement analysis?

P 9-13   nsecutive five-year balance sheets and income statements of Donna Szabo Corpo,

• are shown below and on the following page.

wired

a. ompute or determine the following for the years 2007-2011:

• Degree of financial leverage
• Earnings per common share
• Price/earnings ratio
• Percentage of earnings retained
• Dividend payout
• Dividend yield
• Book value per share
• Materiality of options (use stock options outstanding)
• omment from the perspective of an investor.